Vladimir Ivlev

The Crisis in Soviet Industry

(May 1943)

From Fourth International, Vol.2 No.4, May 1941, pp.121-124.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

Since 1938 Soviet
economy has entered into a profound crisis. One of the clearest
symptoms of this crisis is the complete absence of statistics of
production since that date. The Soviet government abruptly ceased to
make public the production of the various branches of industry. Since
this situation could become disagreeable to the “friends”
of the USSR, the 18th Party Conference, held February 15-21, gave out
statistics which the Stalinist agencies reprint in millions of
copies, but of course without so much as the most superficial
analysis. A large part of the figures are given in rubles and do not
permit, as we shall see, any serious year by year comparison because
of the increasing inflation. The other figures are deceitfully
combined in order to hide the reality in place of revealing it. Thus
the reporters announce dozens of percentages without giving a single
absolute figure; the forecasts of the plan are mixed with the figures
of actual production; the statistics apply according to the various
years to quite different groups of the population, etc., etc. It was
the task of the reporters to provide enough figures so that the
“friends” would have “serious” arguments and
to provide a selection of figures in such a way as to render
impossible any exact picture of Soviet economy and of its
development.

On the basis of the
official figures, and without discussing their accuracy for
the moment, we have undertaken to reconstitute the dynamics of the
development of Soviet production for the last years. We have been
able to obtain positive results for four important branches of
production (steel, pig iron, coal, oil); some inconclusive
indications for a fifth branch (rolled steel). But before explaining
our method and its results it is necessary to review briefly the
recent past.

From the Second to the Third Five-Year Plan

he second Five-Year
plan was completed at the end of 1937. If one attempts to measure its
success by the growth of the fundamental branches of industry,
without entering into the question of the quality of the goods
produced, we can say that the projected figures of the plan were
realized from 70 to 80 percent. The Stalinist leadership claimed a
success of almost 100 percent, but they can do this only because they
replaced the original figures of the plan with much more modest ones
during the course of the realization of the plan.

The third Five-Year plan
was adopted at the 18th Congress of the Stalinist party in March 1939
(not to be confused with the 18th Conference of February);
this means that during more than 15 months there was no plan
whatsoever. Stalin announced at this Congress that the third
Five-Year plan would take the country from socialism into communism
and the third plan was baptized as the “Stalin plan.”
However, the delay in announcing the plan was in itself a sign of the
serious difficulties. Another symptom was the extremely low
coefficient of growth in comparison with that of the second plan.
Taken as a whole, the third plan forecast an average yearly increase
only half of that of the period from 1932 to 1937. For certain
branches the reduction was enormous. Thus the production of steel had
increased from 1932 to 1937 by 193 percent. For the third Five-Year
period the plan envisaged an increase of 58 percent; that is,
one-third to one-fourth less. We shall see how these percentages have
been realized!

The Carrying Out of the Third Five-Year Plan

Because of the lack of
general statistics, it is impossible to obtain a rounded out picture.
Nevertheless, it is possible to obtain a sketch of the development in
a few, but very important, branches of industry from 1937 to the
present time solely on the basis of the official figures announced at
the 18th Conference.

Steel

Last February the 18th
Conference adopted as its goal for the production of steel in 1941,
22,400,000 metric tons. Voznesensky declared in his report that this
figure represented an increase of 22 percent over the production of
1940, which permits us to calculate the latter as 18,360,000 tons
(100/122 of the official figure for 1941). But the official figures
of production for 1937 were 17,330,000 tons and for 1938, 18,000,000.
The plan for 1939 envisaged 18,800,000 tons and no figure-of actual
production was published for that year. The official report of the
18th Conference thus demonstrates that production for 1940 was well
behind the plan for 1939. It is sufficient to open one’s eyes
to the figures, something the servile “friends” of the
bureaucracy are careful to avoid doing. As for the figure set as the
goal of production for the end of the Five-Year plan in 1942,
27,500,000 tons, it is clearly at an inaccessible height. No one at
the Conference, moreover, so much as breathed the figure adopted two
years ago at the 18th Congress of the party when the goal was set
under the genius-like leadership of Stalin.

The rates of growth
speak a very dramatic language. The increase in the production of
steel from 1937 to 1940 was 3.55 percent (if we utilize the official
figure as the basis of calculation), or an average yearly
increase of 1.18 percent during these three years. The Conference,
however, decided to set 22 percent as the annual increase for 1941.
The delegates voted unanimously for such a fantastic decision solely
because of the revolver at their temples.

The plan for the period
from 1937 to 1942 set as the goal an average annual increase of 11
percent, very modest in comparison with the preceding five-year
period. However from 1937 to 1940 the average yearly increase in the
volume of production was 1.18 percent; that is, the plan of growth
was carried out by only 10 percent according to the official figures
themselves!

Let those who find our
figures too somber show us others! Our calculations are confirmed,
moreover, by the Soviet newspaper Industrya which declared on
November 17, 1938, that the production of steel was far behind
schedule and that it had fallen even below the 1938 level.

The steel industry was
not singled out for special criticism at the last Conference of the
party. Some branches of economy may be in better condition. Many
others are worse. Steel, however, is an essential raw material in the
economy. The production of steel at the present time thus represents
an average barometer of the whole industry. The conclusion is
inescapable: since 1938-39 the Soviet economy has entered a profound
crisis. The reality is completely out of accord with the figures
unanimously adopted at the inauguration of the “Stalin plan”
of 1939.

Pig Iron

For 1941 the 18th
Conference set 18,000,000 tons as the goal for pig iron production,
asserting that this would constitute an increase of 21 percent over
the preceding year; that is, that the production of 1940 computed on
the basis of the official figures amounted to 14,876,000 tons. The
production of 1937 was 14,487,000 tons, that of 1938, 14,600,000; the
1939 goal was set at 15,600,000 tons. As in the case of steel, the
production of pig iron in 1940 was well behind the plan set for 1939.
The Five-Year plan envisaged an average annual increase of 10.23
percent. From 1937 to 1940 the increase was 2.70 percent, or an
average increase of 0.90 percent per year, that is, an increase of
scarcely one-twelfth the one set by the plan. Here also no
correlation exists any longer between the plan and the reality.

In March 1939 Stalin
declared: “We may consider quite feasible an average annual
increase in the output of pig iron of two or two and a half million
tons, bearing in mind the present state of the technique of iron
smelting.” (From Socialism to Communism, Joseph Stalin,
International Publishers, 1939.) The average yearly increase between
1937 and 1940 as derived from the official figure was in reality
130,000 tons, that is, one-fifteenth to one-eighteenth of the figure
proclaimed by Stalin. Woe to the delegate who at the last Conference
might have dared to recall the figure given out by the
“master-planner” two years previously!

Coal

The 18th Party
Conference set the production of coal at 191,000,000 tons for 1941,
and the reporter declared that this was an increase of 16 percent
over 1940. The production in 1940, if we again compute from the
official figure, was consequently 164,655,000 tons. In 1937 it had
been 127,900,000 tons. During the first three years of the plan (from
the end of 1937 to the end of 1940) the production thus increased
yearly by an average of 9.58 percent. The plan forecast 18 percent.
The actual gain according to the official figure was thus half the
goal set in the plan. This figure, somewhat greater than for the
production of steel and pig iron, is explained by the tremendous
capital investments in the coal industry.

From 1937 to 1940 new
mines were opened with a capacity output of 40 percent of the total
production in 1937, whereas the capital investments in the other
fundamental branches of industry were considerably smaller. But if
tremendous expenditures in new mines have been able to increase the
official production up to half of the planned increase, the
conditions in the coal industry have not changed very much. On April
4, 1940, the People’s Commissariat for the Coal Industry
declared that one of the principal coal fields, the Don Basin, had
swallowed up great sums of money for technical improvements, but that
its production during the last three years increased scarcely 3
percent!

Oil

The 18th Conference
fixed 38,000,000 tons for the production of oil and derivative
products in 1941. The planned increase for the year 1940-41 was set
at 11 percent. That means that the 1940 output if we again accept the
official figure was 34,234,000 tons. The production in 1937 was
30,500,000 tons. No figures are available between 1937 and 1940. So
the actual average yearly increase between 1937 and 1940 was 4.08
percent, while the plan forecast a yearly increase of 15.41 percent,
or almost quadruple. As for the planned production for 1942 adopted
in 1939, 54,000,000 tons, that has been left hanging in the clouds.
And there was complete silence about it at the last Conference.

Rolled Steel

The production of rolled
steel in 1937 was 13,000,000 tons. The 18th Conference fixed
15,800,000 tons as the goal for 1941. But here we run up against one
of the stratagems used by the bureaucracy to hide the reality. The
rate of growth for the year 1941 was announced at the Conference as
23 percent for “high-grade” rolled steel, while the
output announced was for rolled steel in general. Hence it is
impossible to make any conclusions about the actual production!
Nevertheless, if we apply this rate of 23 percent to the general
output of 1941, we obtain an actual official production of 12,846,000
tons for 1940. In 1937 the output was 13,000,000 tons. So the output
would have decreased yearly from 1937 to 1941 by 0.39 percent instead
of increasing 12.31 percent a year according to the plan. We must
admit that the ruse of the bureaucracy leaves this assumption
inconclusive. However, the very fact that the leadership laid down a
smoke screen over this branch of industry is an infallible indication
that the situation is far from brilliant.

Steel, pig iron, coal,
oil, and rolled steel, these are all the branches of industry in
which we can draw conclusions. The other figures given at the last
18th Conference have so little relationship one with another; the
bureaucracy knows so well how to cover up the reality, that it is
impossible to follow the development from year to year.

In his report at the
18th Conference, Voznesensky compared a few figures of the daily
output at the end of 1940 with those at the end of 1937. He concluded
from these figures the “possibility not only of fulfilling but
of over-fulfilling the 1941 plan.”

An examination of the
figures shows that the rate of growth thus calculated is far behind
those forecast in the Five-Year plan. In fact they are not much more
than a third. Thus according to Voznesensky the daily output of oil
at the end of 1937, between 84 and 86 thousand tons, reached 97 to 98
thousand tons at the end of 1940 which gives an average yearly rate
of growth of 5.1 percent, while the plan forecast 15.41 percent. The
rates thus calculated are however somewhat greater (except for coal)
than those we have obtained by the comparison of the total yearly
outputs. How explain this? The key to the enigma is given us by the
bureaucracy itself through the pen of Walter Duranty, who last
February mentioned the “spurt” in the final quarter of
1940. The figures of daily output presented by Voznesensky are in
reality those of a very short period, prepared for the use of the
Conference.

The Inflation

We shall not discuss
here the question of the quality of production (which has become
worse since 1937). Nor shall we discuss the deterioration of the
machines which occurs in the “spurts” that take place at
each change of director (ami they are frequent) and at the end of
each year (to attain the figures of the plan). On the basis of the
official figures, prepared for the party Conference, we have tried to
show the purely quantitative development of some fundamental branches
of industry.

The 18th Conference was
told that the output of industry had increased from 95.5 billion
rubles in 1937 to 162 billion rubles in 1940; that is an increase of
44 percent or almost 15 percent a year. Not a single one of the
fundamental branches of industry have made, by far, such an advance.
The sole explanation is that during the last three years the ruble
has melted away, prices have increased, the printing press has been
working overtime. An analysis of the official budget will lead to the
same conclusion. (See the article by John G. Wright in The
Militant, March 8, 1941.)

* * *

True to the teachings of
“socialism in one country,” Voznesensky opened his report
on the economic tasks by declaring that the Soviet economic
development is not affected by the “blows of crises and wars.”
However, his speech, those of the other reporters, and the very
holding of the conference itself were nothing but denials of such an
affirmation. Stalin’s silence, more eloquent than his speeches,
only underlined the gravity of the crisis that the Soviet union is
now undergoing.

The conference did not
concern itself over the causes of the crisis. Its task was to cover
it up by denouncing the “individual insufficiencies.” The
present crisis is the crisis of the whole system of bureaucratic
leadership. The nationalized economy is more and more strangled in
the bureaucratic noose. Thus to resolve the fundamental problem of
the economy, that of the productivity of labor, Stalin has found
nothing in his arsenal but ever more brutal violence against the
workers. The present war intensifies this fundamental policy, and in
two ways: by extremely increasing the needs of Soviet defense and by
making much more difficult the buying of tools abroad.

To the catastrophic
consequences of his system, so aggravated in the face of the war,
Stalin has only one answer: ever-increasing terror. Seven People’s
Commissars have been “warned” by the Conference, that is,
they work now under the direct muzzle of the revolver. To complete
the picture, it is necessary to add that they direct such
commissariats as aviation, munitions, electric power, chemicals. The
three last representatives of some importance remaining of the old
Stalinist crew are on the way out: Litvinov has been “purged,”
Molotov and Kaganovitch received “family” warnings.
Besides all this, there is a tremendous circulation of completely new
faces who appear and disappear. The most extraordinary exemplar of
that type is one Merkulov who shone for three weeks like a meteor at
the head of the GPU, but was expelled from the Central Committee by
the Conference and disappeared. Without doubt his fate has been
sealed in the cellars of the Lubianka.

With its expulsions and
warnings, the Conference represents Stalin’s lash to pull the
economy out of the mud-hole where it has bogged down. The method is
not new, the results likewise will not be new. They will be those
noted above, but extremely exacerbated. To save the USSR, today
economically, tomorrow militarily, the Soviet masses have only one
road: to seize the power from the bureaucracy and to restore the
democracy of the Soviets.